We’re only beginning to see the effects of the Silicon Valley bank implosion

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Welcome to Interchange! If you received this in your inbox, thank you for signing up and for your vote of confidence. If you’re reading this as a post on our site, sign up here so you can get it straight in the future. Each week, I’ll take a look back at the hottest fintech news from the past week. This will include everything from funding rounds to trends to analysis of a particular space to hot takes on a particular company or event. There’s a lot of fintech news out there and it’s my job to stay on top of it – and make sense of it – so you can stay in the know. , Mary Ann

Despite the economic turmoil of the past year, I think it’s safe to say that many of us didn’t see a sudden full-blown Silicon Valley bank. While we could have guessed that the storied financial institution was struggling, we didn’t guess that it would shut down so quickly after announcing said struggles. The impact of this event will be severe, widespread and – for fear of being dramatic – potentially devastating for many people. Already businesses are worried about making payroll, which could lead to unexpected closures and layoffs. As one VC said: “It’s bad.” Our hearts go out to all affected.

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Natasha Mascarenhas and I talked to several competitors in the space and surprisingly, they’re seeing a ton of increased demand. You can read about all that here. We teamed up with other TC employees and talked to several of the founders who bank (edition) there to get their perspective.

Outside of TC’s many (and brilliantly reported, if I might add) stories on this topic, which you can bundle up here, here are a few other things I’ve heard concerning the news:

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A fintech investor told me he knows of a company that took out more than $80 million from a Silicon Valley bank on Thursday. Parker Conrad, co-founder and CEO of Ripple, on March 10 Tweeted that his company had historically relied on SVB for payment rails for its payroll and other products, but in light of the news, “immediately accelerated a planned switch to JPMorgan Chase.” Later that day, he said that his company was not able to process payroll for some of the company’s employees and issued an apologynoting that future payroll runs would be processed with JPMorgan Chase, that any payroll funds processed for the day’s check date were “debited from customers the week prior,” and that the company “currently stuck with SVB in the U.S., which is now in FDIC receivership. Unlike encouraging many other VC firms to pull their money out of SVB, fintech-focused Restive Ventures’ Ryan Falvey urged people to “Stay calm.”
Some have speculated that a “Bank runeventually led to the demise of the SVB. Brazilian fintech Tres Finance launched a new checking account for startups in the wake of the news. Via email, a spokesperson told me Friday that $200 million in total withdrawals from SVB had been initiated through Trace Finance since the news broke on Thursday, and that $100 million had already been transferred from SVB. were deposited into new checking accounts with Trace Finance. New checking account customers include Rocket.chat, Mercado Bitcoin, Rentbrella, The Coffee and Gringo.

Note: I had a completely different intro planned today based on a super interesting conversation I had with a neobank founder, but I’m going to save that for another day, because we need to get into the impact of the Silicon Valley bank shuttering. The jump was to the startup and venture world.

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Image Credits: Twitter

weekly news

I conducted a survey of 7 fintech investors: Charles Birnbaum, Partner, Bessemer Venture Partners; Ankur Arya, Partner, Menlo Ventures; Ansaf Kareem, Venture Partner, Lightspeed Venture Partners; Emmalyn Shaw, Managing Partner, Flurish Ventures; Michael Sedgmore, Partner and Co-Founder, Broadhaven Ventures; Ruth Fox Blackadder, Partner, Anthemis; Miguel Armaza, Co-Founder and General Partner, Gilgamesh Ventures. Not saying this just because I took the survey, but I was really impressed with how detailed and thoughtful their answers were. Spoiler alert: B2B payments and infrastructure are on fire and most investors expect to see more flat and down rounds this year. Plus, he was kind enough to share some of the advice he has for his portfolio companies.

According to a recent report, while the public market correction has been widespread, tech and fintech stocks have seen the biggest declines. Specifically, the fintech index — which tracks the performance of emerging, publicly traded financial technology companies — was down 72% in 2022, according to F-Prime Capital’s State of Fintech 2022 report. After peaking at $1.3 trillion at the end of 2021, the F-Prime Fintech Index is set to decline to $397 billion by the end of 2022. Currently, the Fintech Index consists of 55 companies across B2B SaaS, Payments, Banking, Wealth & Asset Management, Lending. Insurance and Proptech. I dug DEEP on the topic here.

Christine Hall reports: “To those who gave you credit monitoring services, now comes Credit Karma Net Worth, a new product to help people discover, grow and protect their wealth. The new feature brings the 16-year-old company one step closer to becoming an end-to-end personal finance management platform that also offers loans, credit building and checking, and savings products, Credit Karma founder and CEO Kenneth Lin said in an interview. Is. As Credit Karma members move through their credit journey of establishing credit and checking their credit scores, they are now thinking about the next phase of their lives: “financial goals and outcomes, he said.”

A follow-up to our Better.com news from last week (a collaboration with the brilliant Alex Wilhelm): Even though the Better.com SPAC combination closes, the transaction is all but neutered from a cash perspective. From the company’s subsequent SEC filing: “Approximately 92.6% of the Company’s Class A ordinary shares were redeemed and approximately 7.4% of the Class A ordinary shares outstanding were outstanding. Following satisfaction of such redemptions, the balance in Aurora’s trust account would be approximately $20,931,627.” While the drop-dead date for going public through the SPAC is September 30, it will be clear by the summer whether Better.com will be able to move forward with the transaction, a source familiar with internal events at the company told TechCrunch. That’s probably when a “death spiral will begin.” With no incoming equity financing and no confidence from creditors, the source said, the company is considering filing for bankruptcy by late 2023 or early 2024. CEO Vishal Garg told The Information that more layoffs and a down round could be in the company’s future. Meanwhile, multiple sources familiar with the background of Better.com’s “agreement” with Amazon told TechCrunch that The deal doesn’t actually represent a partnership between the two companies. Rather, Betterment explicitly announced its new Equity Unlocker tool last week, and said it would initially be exclusively for Amazon employees. was available from. The news was made to suggest that there was some sort of partnership between the two ostensibly to enhance the credibility of Better.com.

According to KPMG’s latest Pulse of Fintech report, the US continued to drive fintech investment last year, clocking $61.6 billion across 2,222 deals during 2022, including $25.2 billion in the second half of the year. Seed-stage fintech deals saw record investments as valuations of late-stage VC-backed companies saw a significant drop, attracting a record $4.5 billion in 2021 from $3.4 billion. KPMG via e-mail says: “We continue to focus on BNPL, AI offerings/devices, and M&A activity remains subdued through the first half of 2023.”

Meanwhile, according to PitchBook, venture fintech startups are capturing more of the broader fintech VC pool. The company’s latest Emerging Tech Research notably found that global VC investment in the broader fintech space is set to reach $57.6 billion across 2,747 deals in 2022, down 40.7% and 18.1% year-over-year, respectively. Within verticals, enterprise fintech startups raised 60.9% more capital from investors than their retail counterparts. In 2020, this number stood at 48.2% of the capital.

Ingrid Lunden reports: “Startups are facing a moment of reckoning in the current economic climate, and one of the more promising in the fintech world today has cracked under the pressure. Railsr, the UK-embedded finance startup formerly known as Railsbank and once worth nearly $1 billion, has been acquired by a shareholder consortium; and as part of the deal, it’s going into administration so it can continue [operating] , , , as it reorganizes. The consortium, which does business under the name Embedded Finance Ltd, includes previous Rails investors D Square Capital, Moneta VC and Venture Capital. The company is not disclosing the value of the deal. It was valued at around $250 million when it returns in October 2022, so it’s a starting point.

According to TC’s Tage Kane-Okafor: African fintech MoneyPoint (formerly known as TeamApt Inc.) has appointed Pavel Swiatek as its chief operating officer. Powell joins the business from Capital One, where he served as Managing Vice President for more than four years. At Capital One, he was responsible for the financial inclusion program of the bank. He was also part of the management team of Bridgewater, the world’s largest hedge fund. At Moniepoint, Swiatek’s experience in financial inclusion will be brought to bear by building the execution operating system, policies and tools to drive strategy and execution. Moniepoint provides payment, banking, credit and business management tools to over 600,000 businesses and processes over $10 billion in monthly TPV. The fintech is backed by global fintech investors LightRock, NovaStar and QED, whose managing partner Nigel Morris co-founded Capital One.

Payments giant Stripe is still trying (hard) to raise venture funding. Eric Newcomer reported last week that the company is now raising $6 billion instead of the $2 billion to $3 billion it was believed to be trying to secure, according to previous reports. According to Eric, Thrive Capital, General Catalyst, Andreessen Horowitz and Founders Fund are participating in the round along with Goldman Sachs private wealth clients. meanwhile there was a scuffle on Twitter Regarding the Company’s decision not to refund the $15 dispute fee for successfully contested disputes. Meanwhile, it also appears how FedNow, a real-time payment system that the Federal Reserve is launching in the next few months, could negatively impact Stripe. Oh, and the company, despite its challenges, “can’t give up,” to the opinion of one fintech observer, is key here.

Construction tech startup Kojo is expanding into fintech. The materials management company has launched a new invoice matching product designed to help contractors manage their expenses, eliminate billing mistakes and streamline payments. Led by 31-year-old founder and CEO Maria Davidson, Kojo says it is used by 11,000 construction professionals across the country. The company has raised over $84 million. TechCrunch covered its last hike here.

Funding and M&A

spotted on techcrunch

Indian fintech unicorn Slice acquires stake in a bank

Why Unicorn Secure Opted for the $95M Credit Facility

FIN raises $36M for a platform to financially support students in business education

Synctera raises $15M to help companies launch embedded banking products in Canada

Elyn offers a slight delay in online payments so you can try before you pay

Open banking startup Abound acquires $601M to supercharge its AI-based consumer lending platform

Student loan relief honestly picks where the new US policies end

and somewhere

FilmHedge Closes $5M Series A Funding; $100M Credit Facility

French fintech Aria secures €50m loan facility

Brazilian B2B payments platform Barte raises $3M

SaaS Fintech Growfin Raises $7.5M

Tiger Global leads $6.5M Moni deal

Insure to acquire Compare.com

Ok, ok, with that, I’m out of here for now. Next week is spring break for my family, so I’ll be out most of the time and the wonderful Christine Hall will be taking over the newsletter for me. But I’ll be back for the March 26 edition! Till then take care of yourself!! Zoxo, Mary Ann

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